The Economics Of The Music Industry: A Band Has To Work Hard To Get Its Part

from the i-gotta-get-mine,-you-gotta-get-yours dept

richw alerts us to a fascinating essay from a member of the band Fucked Up (different, apparently, than the band we recently wrote about going by the name Holy Fuck) explaining the economics of SXSW for bands. Actually, though, it's much more than that. It explains the economics of the music industry, with a single point underlined: as a band, you need to figure out how to get money, and stop waiting for others to just give it to you. The key point is made somewhere in the middle:

You may have heard that the music industry is sort of falling apart. It isn't really a matter of there being less money in the pool - just that the money people have to spend on entertainment (which will always be somewhat of a constant) is just being diverted away from where it historically has gone (record labels and managers). The music industry is by definition an operation invented to divert money spent on music away from actual musicians - the problems that the music industry is currently facing have specifically to do with the fact that the money that would usually flow directly to the bigger economic actors is now going somewhere else.

This is such a succinct and accurate example of what we've been talking about for over a decade, it's worth repeating. As we've seen over and over again in numerous studies, the amount of money being spent on the music industry (remember: that's more than just selling records) hasn't gone down at all, and, in fact appears to have gone up over the last decade. The "issue" is that it's going to many other players in the market, rather than the record labels. In the past, the record labels did their best to keep that money from ever going to musicians. These days, a lot of that money is up for grabs -- and the record labels are upset that they're not getting more of it. Instead, it may be going to others, such as Apple or an ISP or someone else entirely. But, really, it's up for grabs -- and that's why we see a lot of smart musicians figuring out how to take advantage and get their share. But it is a scramble. And if you want to succeed in the music business these days, you need to figure out how to get your share:

Sxsw should be an example of where some of that money is going. While labels are trying to figure out how they can get their piece back, the question sxsw should leave for bands is how to get theirs, or to at least not throw it directly at hospitality and energy conglomerates in order to get to Austin and see your fans money go straight down the throats of Mountain Dew incorporated instead of into your pocket. And again, just to re-iterate - it's not like these companies are inherently evil or vicious. I kind of like Mountain Dew. It's just that they are way better than you at figuring out how to get peoples money, and while your job as an artists should mostly be about making great art, it should also be a little bit about how to be smart at if not making money, then at least not throwing an undue amount away just so someone else can make money at your expense. This is the crux of the matter - there is a big pool of money out there that everyone is trying to get - the music industry is panicking because a lot of the money that used to go from music consumers right to them, is now going to companies that are posted just on the periphery of music, letting bands and labels spend money making music, and then swooping in with music related marketing strategies aimed at getting some of that relatively free money.

The realization is key: basically, there's a pool of money that people are fighting for, and you need to figure out how to get your share, not whine about others who are doing a better job of figuring out how to get their share. It's a recognition that you're in business, and business means competition. In this case, the band appears to have worked out a deal with a clothing company to help fund its performance at SXSW, as part of an effort to show that it could be done, rather than having to lose money and hope that someone at SXSW decides to just give you a big check.

And that's, effectively, all we've been talking about here for more than a decade. It's about recognizing that the market has shifted, no one is automatically owed a living, but in this period of dynamic change, there really are a tremendous number of new opportunities. In the past, if you wanted to be a success, you were much more limited, because you had to wait for one of the big gatekeepers to anoint you. Today, your fate is in your own hands. It doesn't mean that everyone will succeed. Just as in any industry, many will fail along the way. But sitting around demanding money isn't going to work. As Dave Allen put it last year, it's time for musicians to start "being brilliant" from the business model side or to just get out of the way.

The old days of the label getting the lion’s share of the money are dead. Forget 360, that’s a tiny minority, how many people even have a major label deal? 360 is with the manager. Who may take fifteen or twenty percent, but no more. Talent is in control. How do you get a share of talent’s upside?

We live in an overwhelming world filled with over-zealous marketers trying to sell us mediocre wares. But if we find one good thing, we tell everybody we know about it, we want others to share in the joy.

There I am, repeating myself again.

But you don’t want to believe that. You want to believe it’s about getting an MBA, or having a spiffy business plan, or Daddy’s Money.

The best way to promote your band during SXSW is to have a big ass show that has nothing to do with SXSW. That says "I love my Austin area fans enough to not make you purchase many hundreds of dollars worth of wristbands for the privilege to stand in line and maybe get in, provided many others with wristbands, or those with sxsw express, or listers, didnt fill the venue first".

Aren't ISP's 'dumb pipes'?

You make some good points (as ever) Mike, but you’ve also opened yourself to criticism in the way you describe ISP’s as ‘players’ in the music industry in the same breath as Apple.

That gives ammunition to chaps like the manager of U2 who have argued that some sort of tax needs to be levied on ISP’s due to the cash they make from selling bandwidth that gets used for illegal filesharing.

bands have always had to work hard at it. now instead of working at being good song writers and musicians they are working at being marketing and sales people. cant wait to hear what the guys in sales band sounds like.

Follow the money

I think being a financially successful musician is still about connecting with an audience. I guess the big problems I see these days is that 1) many people don't want to pay for music because they don't have to and 2) There is just so much music available from so many sources. So much so that audiences are easily distracted and artists easily forgotten.

true

"As Dave Allen put it last year, it's time for musicians to start "being brilliant" from the business model side or to just get out of the way." quote unquote.....riiiiiight, and get out of the way of what exactly? of other 'money smart' musicians..... who could arguably be making worse music. "...get out of the way..."...your an artist, but if you cant cope with business...... then...im sorry, your screwed. I dont know. Sounds heartless, business orientated, profit orientated. Music in music, must always come first. Its not about getting to that big pool of cash. The industry has to change to a point where such a dash for the money will not be necessary, or the first point...or the second..... somewhere down the line maybe ... one day our minds will evolve to such a compassionate view.

Being a financially successful musician SHOULD be about talent and effort put into the music, but recently it has become more about appearances and just how much auto tune you use. The music economy has been completely destroyed by this generation. First off, we have the Internet, where you can illegally download pretty much any song, so the artist isn't getting their cut. People see this as okay because most artists today are overpaid anyways, but the truth is, they aren't getting nearly as much for their music that you'd think they are. Most of the product is actually given to the record label and their producers. Secondly, we have a music industry that's full of talentless little girls in high heels that are making millions. All the while, our talented musicians are making absolutely nothing. Theres no balance in the music economy, it's one end or the other. Being in the entertainment business just isn't rewarding anymore.

pros?

Are there any pros talking in here? Seems like there ought to be a button some folks could click before commenting that says "I actually make a living in the music industry".
My bet is that people making money in the biz have better things to do than argue over a poorly written article with a bunch of nobodies.